A new rail service from Hamilton to Auckland is well on track after funding has been approved by the NZ Transport Agency.

Transport Minister Phil Twyford announced today that $92.37 million will go towards the construction and operation of the new service, with $79.8m coming from NZTA and $12.57m from local authorities.

Twyford said the service is an important first step to strengthening the connection between two of New Zealand's largest and fastest growing urban areas.

"We know more and more people are commuting between Hamilton and Auckland, and this service will give them a real choice between being stuck in traffic or relaxing on the train," he said.

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"An important part of our transport policy is giving people options so they don't always have to take their car, freeing up the roads for those that have to drive.

"Not only will this service take the stress out of commuting but the carriages will be comfortable and equipped with wi-fi, allowing passengers to use their travel time productively."

Twyford said the service will initially start with a four-carriage train which can carry 150 passengers - with two morning peak trains and two return afternoon peak trains.

"As demand grows, it can be expanded to a five-carriage train carrying up to 200 passengers," Twyford said.

The service is expected to roll out of Frankton in Hamilton in mid-2020, will stop at The Base in Rotokauri before going onto Huntly and finally stopping in Papakura in Auckland, where passengers can change on to the Auckland Public Transport Network.

Future stops may include Te Kauwhata, Pokeno and Tuakau.